Fishing company anticipates significant increase in earnings
Oceana expects 60% increase
SOUTH AFRICA: Despite declines in the sale of canned fish, Oceana anticipates a significant increase in earnings based on the exceptional performance its US subsidiary, Daybrook.
Oceana expects its earnings and headline earnings per share to be at least 60% higher for the half-year ending 31 March 2024 compared to the same period last year.
Its US subsidiary, Daybrook, delivered an exceptional performance with revenue doubling thanks to higher opening inventory levels and continued strong global pricing for fishmeal and fish oil. This contributed to a 13.2% increase in Group revenue for the five months ended 25 February 2024.
Sales of Lucky Star canned fish were down from the record highs of the prior comparative period, when consumers stocked up ahead of a January 2023 price increase. This resulted in an 8.7% decline in canned fish revenue.
Fishmeal and fish oil revenue in South Africa dropped 36.3%. Lower opening inventory and factory upgrades, which affected production, impacted sales volumes.
Upgrades to improve efficiencies and performance at the West Coast factories are progressing as planned. The St Helena Bay canning and fishmeal factory resumed operations in mid-January and the Laaiplek upgrade is on track for completion in mid-April.
Revenue from the Group’s wild-caught seafood business declined by 18.4%.
Lower horse mackerel catch rates in South Africa, were compounded by the Desert Diamond being unable to fish due to a major breakdown and the time needed to source replacement parts. This was offset by better catch rates in Namibia during the second quarter, firm demand and US-dollar export pricing.
An improvement in fleet utilisation contributed to higher hake sales volumes, with good prices resulting from strong European demand.
Poor fishing conditions affected squid catch rates across the industry.
Outlook
Despite the constraints South African consumers are facing, Lucky Star expects stronger March sales volumes with only a marginal decline in revenue at the interim close. The focus for the second half will be on improving margins, while sales volumes will benefit from the new Lucky Star canned meat factory, which is now in full production.
Anchovy and red-eye landings for the season, which peaks between March and July, will determine the performance of the South African fishmeal and fish oil business.
Pricing for fish oil is expected to remain strong over the short- to medium-term given the shortage in supply and sustained global demand. Daybook will continue to ensure that it holds sufficient inventory to meet demand during its off-season.
Firm demand and pricing for wild-caught species is anticipated to continue and catch rates in South Africa and Namibia have shown signs of recovery in the second quarter. Repairs to the Desert Diamond should be completed during the second half of the year.
Following the certainty provided by the 15-year renewal of fishing rights, the Group’s three-year capital investment plans to upgrade its South African processing facilities and vessels are on track and will contribute to future operational performance.
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